Kosel_Sales_Answer_SP09 - ID Exam Name Instructor Grade...

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Unformatted text preview: ID: Exam Name: Instructor: Grade: Sales_LSN_KoselHSP09 Kosel .l‘ Sales_LSN_‘Kosel_SP09 Kosel Page1 of‘l Exam taken with Sofl'esl v8.8 ID: Sales_LSN_Kosel_SP09 Kosel 1) Question 1 Dear San Francisco Zoo, I am sorry about your loss to the tiger last year. I will explain to you the rules that will be applied to your case. and we will try and see what options are available to you to try and get your $5.000 back from N28. The UCC Governs this Agreement between SF Zoo and N28 Before we start. it is important to determine what laws apply to your situation. The UCC is a body of law that covers commercial transaction. and in yur particualr case, we would need to see if it falls under the Scope of ARticle 2 which is for the Sale of Goods. The goal of the UCC is to apply uniformity. as well as to simplify clairfy transactions between parties like you and N28. as we want to allow parties to engage in business in a way that works for them. '(1-103). While parties can vary their contractual relationships with others, there are some important rules they must follow. We will get to those in a litlle bit. Art. 2 Applies to Goods and Applies to this Transaction First we must determine if Article 2 even applies to your case. Article 2 covers transaction in goods (2-102). Goods are defined as all things movable (2-105). In this Page 1 of 13 (Question 1 continued) ID: Sales_LSN_Kosel_SPOB Kosel case, your agreement (we won't call it a contract just yet!) with NZS appears to be for two things: Rajah's sperm and a study that NZS prepared.‘ This appears to be a mixed transaction. First, the sperm would likely be considered a good. lt—is-movable and fungible (2-105) and therefore would qualify. The study is less obvsious. It could be argued that it is more like a service or information and therefore not covered under Article 2. However, courts are becoming much more comfortable these days applying the UCC by analogy - basically if there is a good involved in the transaction, you get yo—LI'P—pa—win—the—dcorand the UCC will be applied by analogy to the rest of the transaction (the study in this case). Still some courts use the predominant feature test, but in this case. the sperm seemed to be the goods sought after. so the court would apply the UCC to the goods (the sperm) and the UCC by analogy to the rest of the transaction. SF 200 and N25 Are Merchants, Therefore some special rules will apply Now that we know the transaction will be covered. we need to look at the parties. It is likely that both SF Zoo and N28 will be considered merchants under the UCC (2-104). A merchant is a person who holds itself out as having particular knowledge and skill peculiarto the goods involved in the transaction. This tranasction is for animal sperm and ifnromation about it. Both SF Zoo and N25 are highly skilled in this field and would be considered merchants. This is important. because while the UCC applies to all transactions for goods. there are some special rules that apply to merchants. I will highlight those as we go along. Page 2 of 13 ( Question 1 continued) ID: Sales_LSN_Kosel_SP09 Kosel The Contract Between SF Zoo and N28 Next. we must determine whether there was a contract between you and N28. The facts are unclear as to what your arrangement was with NZS. so I'd certainlty like to know more about that. Generally there are requirements under the Statute of Frauds for contracts (2-201). For contracts over $500. there must be a wirting sufficient to indicate that a contract has been made between thea parties and signed by the party who it is being enforced against (in this case N28). I would need to know if the contract was in writing and what it says to be able to see if it complies with the statute of frauds. (You also might have heard that the proposed UCC wants to raise the SOF requirement because $500 is such a low number - after all it was ptu there in the 19505!) but even with the proposed change of $5000, you would still need to meet the requirements). Even if there isn‘t a writing, there may still be a contract that is valid and efnforceable under 2-201(3b). The contract will be enforcable if there were goods for which payment has been made and accepted. In this case, it is clear that you paid NZS. They took money performed. Further. the contract may be enforcable if the goods are particular to the specific buyer and not suitabte to others, which arguably Rajah's sperm is. Because of these issues, and because you and N28 are acting as if you are in a contract, the court would find a valid contract. Finally. even if all the terms are not in there, the UCC provides many gap fillers to fill in the missing pieces. Regardless, it appears as if you were both acting liek you were in a contract so the court woudl find there was one and this does not appear to be a contentious issue. Page 3 of 13 (Question 1 continued) ID: Sales_LSN_Kosel_SP09 Kosel Risk of Loss The sperm was damaged in transit. so an important issue to look at to see if we can get your money back is which party bore the risk of loss in this transaction. In this case. again, I'd need to see contract to see if either designated FOB under 2-319 to assign risk. In the event that you did not, this would be considered a shipment contract. In a shipment contract, there is no specificed destianation for delivery, and thefirtsk of loss passees to the buyer when goods are delivered to the carrier. (2-509). It appears that in this case. the seller (NZS) sent a reprentative to get the sperm. IF the representative was their own staff. because they still had possession of the goods. we could argue that they did not deliver it yet and they still had the risk of loss. (2-503). If the representative was a carrier, then the risk of loss would pass to SF Zoo once the gave the sperm to the carrier and SF Zoo would bear the risk of loss. We would need to know more to determine this. but from the facts, it appears it was their representative, so the risk of loss for the goods is on them. That is good for us. Delivery of Nonconforming Goods Further, when the sperm was delivered, it was nonconforming. Under 2-106, goods are conforming when tjeu are in accordance with the obligations of the contract. In this case. you were buying Sperm to impregnant your female tiger. You needed good quality Rajah sperm. What was delivered was useless. This is a nonconforming good because it is not what you identified in the contract discussions. Page 4 of 13 (Question 1 continued) ID: Sales_LSN_Kosel_SP09 Kosel To decide how to I need to know exactly what happened when the sperm was delivered to you. Did you take it? Did you reject it? Did you call NZS? If so when? It matters because there are rules about nonconforming goods. In order properly reject the sperm as a nonconforming good, you would need to have. within a reasonable time of the delivery, and before any major changes occured (it appears it was already thawed out so that's not a problem) nW Prompt notification is important because the longer you have the good. the more likely the court will say the damged happend when you had it. (race horse) Anyway, if they sent the goods there with time to spare for performance, you also need to give them a \“mH/FA "‘"k‘r Ar chance to cure, which in this case would mean to send more Rajah sperm (2-508). Even if the contract date was passedtthey/n'right still be able to cure undngQOB if they \, reasonablby believed the goods would be conforming. Did you do these things? In ,—--vh_ g __ ‘Mfl‘w VII/fl ,_ order to properly object you need to. If you didn't do those thigns. and you accpeted the goods. then you may be able to revoke your acceptane under 2-607 and 2-608. TO do that you must have paid (which you did) and the burden shifts to you to show they are nonconforming. Usually that is hard. but in this case, it will really matter how long you held on to the sperm. and if you can show it was thawed when you got it. If you can show that the goods wer enonconforming and. you can revoke if the defect substantially impairs the value, which in this case, the defect certainly does because the sperm won't work. Most importanlty. when there is a delivery of nonconforming goods. the risk of loss stays with the seller (NZS) until cure or redelivery of conforming goods so that is great for us because they Page 5 of 13 ( Question 1 continued) ID: Sales_LSN_Kose1_SP09 Kosel M bear the loss since the goods were nonconforming! (2-510). Depending on how this went down, you would likely beable to either reject the goods or revoke your accpetance. They will argue Change in Circumstances - impossiblitylimpractability NZS may argue the impossibility defense claiming that something happened after performance that the goods suffered casualty without fault of either party (2-613). I do not thing this is a strong argument because it is forseeable that plane delays wll happen, and N28 should have thought about that with the shipping. These cases are hard to prove and I certainly don't think this will work here for them. You have Several Remedies We can try to get your $5000 back in several ways. First. the UCC wants to ensure that remedies are liberally construed to put you in the same position you would have been in if the contract was performed (i.e you would get some grade a Rajah sperm). 1-305. Since seller breached in this case by sending nonconforming goods. you could have gone out and covredd under 2-712. It doesn't seem like you wanted to do that. What will help you is the remedy under 2-711, since you likely rejcted orjustifyably reovked accpetance. then you can cancel and recover what you have paid, so you could get the $5000 back. however, there is a quesiton of good faith. You must operate under a duty of gogi faith , I Mr > > ,_.. '-*"\ Page 6 of 13 (Question 1 continued) ID; Sales_LSN_Kosel_SP09 Kosel in the contract. It notes that SF 200 has decided not to move forward with impregnanting the female tiger. You need to ask yourself - did this breach substantially impair you? When was this decision made? Good faith requires you to be honest in fact and act in accordance with the other party's expectations - which is observace of reaonable commercial standards of fair dealing. (1-201 (note 20) and for merchants 2- 103) If you arejust changing your mind. then NSZ can argue that you are not negoitating in good faith. Warranty In the event the court does not find any of the above. your last effort is to go after them for Breach of Implied Warranty for Merchantability and Fitness for a Particular Purpose. \f»\_.ww,ww,dm, r «v 77 ~ ~ m r Under lWM (2-314) the goods must be fit for their purpose and pass muster in the trade. Basically - they need to do what they say they will do. In this case, the sperm didn't work. Further. under Fitness for a partiucarl purpose. 2-315, since NSZ had reason to knwo what you wanted the sperm for and you went to them specifically for their experteise, they will be liable to you for damages if the goods don't fit that purpose. Obvsiouyll the goods dont. As long as they ddidn't dislcaim warrantes under 2-316. you can claim damages for the value of the goods as you received them (bascially nothing for the speerm. maybe some $$ for the study) and the price you paid ($5K) What would I have told them? If you called me earlier. I would have told you to make sure to get the contract in writing. I would have also advised to you ensure the risk of loss remained on N28 - you could Page 7 of 13 (Question 1 continued) ID: Sales_LSN_Kose1_SP09 Kosel have put FOB terms (FOB SF Zoo) which means NSZ ebars the risk of loss during shipment. Also, you could have made it a desitnation contract which keeps the risk on the seller during delivery. I would have also suggested that you used your right to inspect the goods before you accepted (if you accepted them) under 2-513. Even if you are at a distance with NSZ. there are ways under the UCC to protect both of you by using the bill of lading procedures. This would have protected you because you would have known right away that the sperm was thawed, or at least been able to bring somebody with you who knows how to inspect the sperm. You could also have added a liquidated damages clause to reover any damages - as long as it was not punitive and as long as the damages would be hard to calculate. I think that would fit your case, especially becaue you had two parts to the transaction. and who knows would could have happened? QUESTION 2 Dear Connie, Let's me see if I can help you with your issues with the makeup. Art. 2 Applies to Goods and Applies to this Transaction First, we must determine whether the products you bought fall under the UCC. Article 2 covers transaction in goods (2-102). Goods are defined as all things movable (2- Page 8 of 13 (Question 1 continued) ID: Sales_LSN_Kose1_SP09 Kosel W 105). In this case, you bought makeup products which clearly are movable items and would fall under the defintiion. There was a sale of the goods so we are under the UCC. Was there a contract? Next we need to examine the relationship betweeen you and your friend. Under the Statute of Frauds. contracts for the sale rof goods over $500 (yours was $620) must have some writing sufficient to indicate that acontract has been made, and be signed by ifié’ia‘rtQEQiEBo it is being enforced (you in and have the quanitity. The terms don't need to be specific. as the UCC has lots of gap fillers to fill in the missing pieces, as the goal is to allow folks like you and your friend to enter into transactions like this. It does not appear that you had such a writing, however. a contract can be formed in other ways (2-201(3b). One way is if the goods have been paid for and delivered however this has not happened in your case. Als a contract may be formed in any manner sufiflcnet to show agreement between the parties which recognizes the existence of a contract. (2-204) That could include your conduct. In this case, you went to a makeup party and placed an order with your friend. Further. even though you didn't know the price, that does not matter as it will be filled in with a reasonable price ‘ A _—_,4 -—_——\__/‘—-‘~——-v-—-/ by the courts. (2-204. 2-305) If there is intent by the parties to be in the contractual relationship, the contract wil not fail for indefintness (2-204). Page 9 of 13 (Question 1 continued) ID: Sales_LSN_Kose1_SP09 Kosel You might say - well I didn't accept any contract. In general, accpetatnce can be made in any way that is reasoanble in the circumstances (2-206). When your friend offered to sell you products, it was reasonable for you to accept how you did and it appears you were in a contractual relatioship with her. She made the offer. and a reasonable acceptance is an agreement at the party If you do not pay, she will likely sue you for breach of contract. Payment Due on Delivery Typically in a contract, unless parties agree otherwise, payment is due at the time and place the buyer is to receive delivery (2-310). In this case, the payment would be due when friend delivered the makeup cache to you at your house. Therefore, when she showed up and you didn't pay, she will liekly claim you breached the contract because payment was due at that time . (if payment wasn't due until the end of the month or later, then it could also signal an anticipatory repudiation under 2-610.) Assuming that you breached, your friend has several remedies against you. Sellers Remedies Your friend will be able to show you breached the contract. First. if she wanted to, she could choose to resell the goods under 2-704. as long as she made a good faith effort to mitigate her damages and sell the products you didn't want - she will likely do this as she is working on commission and just wants her money from the sale. Your friend can also resell the makeup and recover the money from you under 2-706. In that case. she could come after you for damages of the contract price (620) minus whatever Page100f13 (Question 1 continued) ID: Sales_LSN_Kosel_SPO9 Kosel resale value she got. One remedy she may pursue, and one that I'm nervous about, is damages for non acceptance as a Lost Volume Seller (2-708). She may say that your breach not only puts her out the $620 but that also. she spent with you at the makeup party was time lost trying to sell makeup to other guests! If she can show this, she will be able to recover the $620 but any profit she can prove she would have made with certainty (tell me - how good of a sales person was she???) Also, if she doesn't go for this remedy. she can try and recover the unpaid Market Value Price (2-708(1) which would be the difference between market value for the makeup and the unpaid contract price ($620). Any of these damgaes are available to her as she can elect her remedies. As you see. I am a little worried because I feel you were in a contract with her, and your have breached, so she may be able to recover these damages. Good Faith and Unconscionabily Don't worry Connie. I save your best argument for last. While I think you have some challgenes with your case. I don't think that the makeup hostess has a slam dunk case against you and we will fight against her. First of all, the hostess is likely a merchant (2- 104). A merchant is a person who holds itself out as having particular knowledge and skill peculiar to the goods involved in the transaction. She has an established set up and runs around and peddles her goods at these parties, and she also gives facials and other things (these are serivces but weren't part of your paid transaction so we don't need to evaluate the mixed goods again). Anyway. she is held to a higher standard in some ways. Also, the UCC, which it gives plenty of freedom to contract (did you know the word reasonable appears 94 times in the UCC - how's that for flexibility!) there are Pagefi ot13 (Question 1 continued) ID: Sales_LSN_Kosel__SP09 Kosel some basic concepts that survive from the common law, particularly to protect parties who may not commonly enter into transactions. (1-103). PRinciples of law and equity as well as other rules regaridng coercion. duress etc. still govern in the UCC becaus this helps to maintain rules of minimm fair play. All parties who act under the UCC have a duty to act in good faith (1-304). Good Faith is defined as honesty in fact and the observance of reasonable commercial standards of fair dealing. That applies to you. As a merchant, the hostess has the same duty, but the phrase "in the trade" is added to the observance of reasonable commercial standard of fair dealing (2-103). First. we must evaluate whether you wer both being honest in fact. i think you both were. Ithink you wanted to buy the makeup and i think she wanted to sell it to you. But the main issue is the seocnd part - are you both acting within each other's reasonable expectations? Let's start with you. I think you were. I think with your knowledge, and juduing from your non experience with makeup buying, you expected to pay maybe a little more but not $620 for the makeup. i think that anybody who is a makeup seller and who is giving facials and manicures can tell by your. let's say not perfect nails. that you may not understand the cost of these products. I think that in general, we could argue that in her trade. salesfolk should at the least help buyers understand what they are getting into. I think she did not act within your expectations and was in bad faith. Further. she noted that all sales are final and no returns. I think we need to look closely at how others operate in the trade to see if this is consistent. I mean - what if you were allergic to the makeup and your face broke out in hives (if that happens, please come see me Page 12 of13 { Question 1 confirmed) ID: Sales_LSN‘Kosel_SP09 Kosel because we can go after her for breach of warranty) but anyway, I think that we can make a case to show how others sell in her fireld and that she was ...
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